Firms to sell-off Taipei buildings

CASHING IN:Insurance companies, which have parked large amounts of idle cash in the capital’s commercial property sector, are planning a series of high-end auctions

By Crystal Hsu / Staff reporter

The commercial property market is braced for a bustling week this week with several office buildings in central Taipei set to be auctioned off after the government issued a series of mixed messages on property transactions.

The Ministry of Finance said last week that it would remove a special sales tax as well as its ban on the sale of state-owned plots of land in New Taipei City (新北市) in order to bolster national treasury coffers, but added that it would only do this if it does not fuel property speculation.

The Financial Supervisory Commission (FSC), on the other hand, voiced plans to raise hurdles for life insurers seeking to invest in property while also tightening land financing for banks.

Today, the asset management and securities unit of Yuanta Financial Holding Co (元大金控) are scheduled to sell an 18-floor office building on Jianguo N Rd Sec 2 as well as office space in Ximending (西門町) and Neihu (內湖) districts through a public auction with a combined floor price of NT$5.08 billion (US$169.19 million), said bidding organizer DTZ, an international real estate consultancy.

Yuanta Asset Management Co (元大國際資產), owner of the office building on Jianguo N Rd, intends to realize its gains from the property it acquired from MassMutual Mercuries Life Insurance Co (三商美邦人壽保險) three years ago, DTZ said.

The building has 4,729 ping (15,605m2) in floor space located on a 574 ping plot of land, translating into NT$6.09 million per ping as measured by land alone, DTZ general manager Billy Yen (顏炳立) added.

Built in 1985, the 27-year-old building will soon be qualified to apply for urban regeneration funding which would bolster its value, Yen said, adding that it is now fully occupied with rental yields averaging at 2.16 percent.

Major domestic life insurance companies, including Cathay Life Insurance Co (國泰人壽), Fubon Life Insurance Co (富邦人壽), Shin Kong Life Insurance Co (新光人壽) and China Life Insurance Co (中國人壽), have all indicated plans in stock filings to join bids for the acquisition of property in Greater Taipei.

With property prices higher and sapping profitability, the FSC met with insurers on Tuesday for talks on raising the minimum rental yields on real estate investments from the current level of 1.875 percent to 2.215 percent.

The FSC is also considering raising minimum occupancy rates to 70 percent of office buildings acquired, from the present 60 percent.

In addition, the commission has asked banks to set aside more provision for land financing — from 0.75 percent last year to 0.8 percent this year.

On Thursday, MassMutual Mercuries Life is scheduled to divest partial floors in a 12-story office building on Xinyi Rd Sec 4 with an asking price of NT$5.88 billion, bidding arranger Savills Taiwan Ltd (第一太平戴維斯) said.

Space for sale totals 4,498.39 ping from the 2nd to the 7th floor, in addition to the existent parking space in the 14-year-old building’s four underground levels that is half-owned by Horizon Securities (宏遠證券), Savills Taiwan said.

Cash-strapped Prince Motor Group’s (太子汽車) landmark office building on Dun Hua S Rd is also to be auctioned off on Thursday, the second attempt at selling the foreclosed building, for NT$11.41 billion.

The building has 6,631.5 ping in floor space, which is NT$1.67 million per ping, foreclosure data showed. The price will go down if a buyer cannot be found.